Nasdaq Copenhagen London Stock Exchange Other partners 27 January 2016

Transcription

1 Page 1 of 24 Nasdaq Copenhagen London Stock Exchange Other partners 27 January 2016 Ringkjøbing Landbobank s announcement of the annual accounts for Record increase in customer numbers creates the best profit in the bank s history The profit before tax was DKK 588 million, which is marginally better than 2014 and equivalent to a return of 20% on equity at the beginning of the period. The core earnings show an increase of 13% to DKK 588 million, which is thus above the upwardly adjusted DKK million interval. The profit before tax and the core earnings are the best in the bank s history and considered highly satisfactory. (million DKK) Total core income Total costs and depreciations Core earnings before impairments Impairment charges for loans etc Core earnings Result for portfolio Expenses for bank packages Profit before tax in headlines: The best profit in the bank s history The profit before tax was DKK 588 million, equivalent to a return of 20% on equity at the beginning of the period Core earnings exceed expectations, increasing by 13% to DKK 588 million Best ever net increase in customers High levels of customer satisfaction and willingness to recommend the bank The rate of costs improved by 2% to the lowest in Denmark 12% increase in loans and 10% increase in deposits Proposed dividend raised from DKK 26 to DKK 30 per share. A new buy-back programme for up to DKK 140 million is also proposed, increasing total distribution to 61% Expectations for core earnings of DKK million in 2016, to which must be added the result for portfolio Please do not hesitate to contact the bank s management if you have any questions. Yours sincerely, Ringkjøbing Landbobank John Fisker Jørn Nielsen

2 Page 2 of 24 Management Report Core income The total core income was 5% higher for the year, with an increase from DKK 907 million in 2014 to DKK 954 million in The bank considers the increase satisfactory. Net interest income was DKK 638 million in 2015, which is marginally higher than in 2014, where net interest income was DKK 635 million. The modest increase in net interest income should be compared to a 12% increase in lending. The net interest income was thus influenced by a falling interest margin which reflects the competition in the sector, and the net interest income was also affected by the low level of interest rates. The increase in lending was also primarily realised in the second half-year. Fees, commissions and foreign exchange income amounted to net DKK 275 million in 2015 against net DKK 243 million in 2014, a 13% increase. The increase is attributable inter alia to strengthened earnings from securities trading and custody accounts as a result of greater trading activity and from asset management as a result of increasing volumes, and the conversion activity within mortgage loans also had a positive effect on earnings in Earnings from sector shares also increased by DKK 10 million from DKK 26 million in 2014 to DKK 36 million in Costs and depreciations Total costs including depreciations on tangible assets were DKK 306 million in 2015 against DKK 298 million last year, an increase of 3%. The increase in costs for the year is attributable to the appointment of additional employees and a general salary increase. There was also a small increase in other administration costs, and the total expenses for the Guarantee Fund and the Resolution Fund in 2015 increased by just over DKK 2 million relative to Finally, write-downs on tangible assets fell in the year. The rate of costs improved by 2% relative to 2014 and is now 32.1%, still the lowest in Denmark.

3 Page 3 of 24 Impairment charges for loans Impairment charges for loans amounted to DKK 60 million against DKK 87 million in the previous year. The falling trend from 2014 thus continues for impairment charges, which are equivalent to 0.3% of the total average of loans, impairment charges, guarantees and provisions against 0.5% in It is noted generally that the average credit quality of the bank's loans portfolio remained at a high level in During 2015, individual impairment charges were reversed on a number of customers. The bank also terminated certain customer accounts in the financial year. These two circumstances contributed to a reduction of the bank's total balance of individual impairment charges during the financial year from DKK 701 million at the beginning of the year to DKK 665 million at the end of the year. The bank assessed that there was a need to increase the collective impairment charges by DKK 47 million from DKK 226 million at the beginning of the year to DKK 273 million at the end of the year. The increased collective impairment charges are mainly related to animal production in the bank s agricultural portfolio. The quoted prices for both pork and conventional milk fell from the beginning to the end of 2015, which further increased the pressure on the sector. The exposure to animal production accounts for 3% of the bank s total loans and guarantees. Individual impairment charges on cattle and pig farms were DKK 284 million and collective impairment charges totalled DKK 160 million, and the collective impairment ratio was 43% at the end of Given the challenges experienced in animal production, the bank is satisfied with the fact that its farmers are less indebted than the average in the sector, and we feel comfortable with the current impairment level. The bank s total account for impairment charges and provisions was DKK 943 million at the end of the year, equivalent to 4.6% of total loans and guarantees. Actual losses on loans for the year less interest on the impaired part of loans and receivables previously written off were on a par with the impairment charges recognised as expenses, and provisions increased by DKK 12 million. The portfolio of loans with suspended calculation of interest amounts to DKK 74 million, equivalent to 0.4% of the bank s total loans and guarantees at the end of the year. On the basis of prospects for economic development in 2016, including those for trade and industry, the bank expects total impairment charges in 2016 to be lower than in 2015.

4 Page 4 of 24 Core earnings (Million DKK) Total core income Total costs and depreciations Core earnings before impairments Impairment charges for loans etc Core earnings The core earnings were DKK 588 million against DKK 522 million last year, an increase of 13% and the best ever for the bank. At the beginning of the year, the bank announced expected core earnings for the year in the DKK million range. This range was upwardly adjusted to DKK million in connection with the presentation of the bank's half-yearly report, and the core earnings realised are thus above the upwardly adjusted range. Portfolio income and market risk The result for portfolio for all of 2015 was zero including funding costs for the portfolio. The result for portfolio was affected by the interest rate fluctuations which characterised the financial markets throughout Shares etc. at the end of the year amounted to DKK 467 million, DKK 11 million of which was in listed shares, DKK 197 million in investment fund certificates and DKK 259 million in sector shares etc. The bond portfolio amounted to DKK 3,115 million, and the majority of the portfolio consists of AAA-rated Danish government and mortgage credit bonds. The total interest rate risk - calculated as the impact on the profit of 1%-point change in the interest level - was 2.2% of the bank s Tier 1 capital at the end of the year. The bank s total market risk within exposures to interest rate risk, listed shares etc. and foreign currency remains at a moderate level, and this policy will continue. The bank s risk of losses calculated on the basis of a Value at Risk model (computed with a 10-day horizon and 99% probability) was as follows in 2015: Risk relative to equity Risk in DKK million end of year in % Highest risk of loss: Lowest risk of loss: Average risk of loss: % 0.16% 0.48% End of the year risk of loss: %

5 Page 5 of 24 Profit after tax The profit before tax was DKK 588 million. The profit after tax of DKK 129 million was DKK 459 million against last year s DKK 446 million. The profit before and after tax is equivalent to a return on equity at the beginning of the year after payment of dividend of 20 % and 15 % respectively. Balance sheet The bank s balance sheet at the end of the year stood at DKK 22,317 million against last year s DKK 21,238 million. The bank s deposits increased by 10% from DKK 15,450 million at the end of 2014 to DKK 16,987 million at the end of The bank s loans increased by 12% from DKK 15,507 million at the end of 2014 to DKK 17,300 million at the end of The growth in the bank s loans is broadly based with growth from both the branch network and the bank s niche concepts. The bank thus also in 2015 met its goal of realising growth in loans via an organic growth strategy. The bank s portfolio of guarantees at the end of the year was DKK 2,234 million against DKK 2,218 million in Liquidity The bank s liquidity is good, and the excess liquidity relative to the statutory requirement is 100%. The bank s short-term funding with term to maturity of less than 12 months amounts to DKK 0.5 billion, balanced by DKK 4.0 billion, primarily in short-term placings in the Central Bank of Denmark and in liquid securities. The bank is thus not dependent on the short-term money market. During 2015, the bank raised long-term funding to the equivalent value of a total of DKK 0.7 billion with an average term of 5 years. The bank's loans excluding reverse transactions are at the same level as the bank's deposits at the end of the year. The loans portfolio is thus more than fully financed by the bank s deposits and equity. In addition, part of the loans portfolio for wind turbines in Germany was refinanced back-to-back with KfW Bankengruppe, which means that DKK 1,102 million can be disregarded in terms of liquidity. The bank thus requires no financing for the coming year to meet the minimum requirement that it must always be able to manage for up to 12 months without access to the financial markets. New liquidity regulations came into force with effect from 1 October 2015, viz. the so-called LCR (Liquidity Coverage Ratio) key figure. The key figure will show the ability of banks to honour their payment obligations for a 30-day period without access to market funds, and the key figure will replace the current Section 152 liquidity key figure. The LCR key figure is computed as the ratio of the bank s cash and cash equivalents / liquid assets to its payment obligations for the next 30 days as computed in accordance with specific rules.

6 Page 6 of 24 Non-SIFI banks must have a cover of minimum 60% on 1 October 2015, gradually increasing by 10% on 1 January 2016 and 1 January 2017 and by 20% on 1 January 2018 such that the key figure must be minimum 100% on 1 January SIFI banks must have a cover of 100% as early as 1 October Ringkjøbing Landbobank wishes to follow the rules applying to SIFI banks, and the bank s target for the LCR key figure was 100% as early as 1 October On 31 December 2015 the bank s LCR key figure was 106% and the bank thus met the target. Dividend and share buy-back programme Under the share buy-back programme which was adopted by the annual general meeting in February 2015, 100,000 shares have been bought and earmarked during the year. It is proposed to the general meeting that these 100,000 shares be finally cancelled in connection with a capital reduction, thus reducing the number of shares in the bank from 4,670,000 to 4,570,000. The bank s board of directors will also propose to the general meeting that a dividend of DKK 30 per share, equivalent to DKK 140 million, be paid for the 2015 financial year. A dividend of DKK 26 per share was paid for the 2014 financial year. A proposal will also be made to the general meeting that a new buy-back programme be established under which shares for up to DKK 140 million can be bought for cancellation at a future general meeting. The total distribution increases from 60% in 2014 to 61% in 2015 on the basis of the above proposals. Capital The equity at the beginning of 2015 was DKK 3,099 million. To this must be added the profit for the year, while the dividend paid and the value of the own shares bought must be subtracted, after which the equity at the end of the year was DKK 3,296 million, an increase of 6%. The bank s total capital ratio was computed at 18.8% at the end of 2015, and the Tier 1 capital ratio was computed at 17.1%. Capital ratios Common Equity Tier 1 capital ratio (%) Tier 1 capital ratio (%) Total capital ratio (%) Individual solvency requirement (%) In 2015 the bank redeemed previously issued additional Tier 1 capital and Tier 2 capital because these items could no longer be fully included in the bank s capital base due to the phasing-out rules of the CRD IV provisions. The additional Tier 1 capital of nom. DKK 200 million issued in 2005 was consequently redeemed in March 2015, and early redemption of the Tier 2 capital of nom. EUR 27 million issued in 2008 was made in June 2015.

7 Page 7 of 24 In May 2015 the bank issued Tier 2 capital of EUR 50 million in replacement of the redeemed capital. The issue, which was oversubscribed, has a maturity period of 10 years with a first call-option / early redemption after five years. The interest on the issue was fixed at the Euribor 3M plus 180 basis points and with fixing of interest every three months. The issue took place under the bank s EMTN programme and it is registered at the London Stock Exchange. The bank calculates the individual solvency requirement on the basis of the so-called 8+ model. The calculation method is based on 8% plus any supplements calculated inter alia for customers with financial problems. The 8+ model thus takes no account of the bank s earnings and cost base or its robust business model. Despite this, the bank s individual solvency requirement at the end of 2015 was calculated at 9.0%, which is on level with the end of High levels of customer satisfaction and willingness to give referrals The bank has gained a large number of satisfied and loyal customers over many years. The good customer relationships have greatly contributed to the bank's growth in recent years because existing customers have referred new customers to the bank. The bank is very proud of and pleased with the high levels of customer satisfaction and willingness to refer new customers to the bank. We are also very satisfied with the fact that these two points were confirmed in a major customer satisfaction survey among the 20 biggest banks in Denmark (Voxmeter Customer Experience Management survey 2015). Measured on customer satisfaction, the bank is in third place and it also ranks as the bank in Denmark with the highest rate of customers (47%) who most actively recommend it to others. Record increase in customer numbers The bank has carried out a large number of outreach initiatives towards both existing and new customers in recent years, including opening a Private Banking branch in Aarhus and upgrading the bank s Private Banking branch in Holte in Over the years, other outreach initiatives have also been carried out within both the other niche products and the branch network in Central and West Jutland. The outreach activities were maintained during 2015, which contributed to a net increase in customer numbers in 2015, the greatest net increase ever recorded measured on the contribution margin. The increase in customer numbers is broadly based and relates to new customers in both the branch network and niche concepts, and the loss of customers was also in 2015 at a modest level. The outreach initiatives are scheduled to continue in 2016 at both regional and national levels.

8 Page 8 of 24 Expected result and plans for 2016 The bank s core earnings in 2015 were DKK 588 million, which is above the upwardly adjusted DKK million interval for the year. Ringkjøbing Landbobank s market share is about 50% in that part of West Jutland where the bank s old branches are located. The bank also has well-established branches in Herning, Holstebro and Viborg which are continuing to operate positively. The bank s plan is to retain and develop this portion of the customer portfolio with sound and competitive products and with focus on the employees expertise and work in advising customers of the financial products. In 2016, the bank expects a continuing positive inflow of customers to its branches in Central and West Jutland because of its long-term outreach marketing and its market position in general. The bank will also focus on developing the activities in its niche concepts in the forthcoming year. Focus will thus be placed on serving the bank s existing customers and further developing the portfolio within inter alia renewable energy, wholesale loans and medical practitioners / dentists. The bank s Private Banking branches in Ringkøbing, Herning, Holte and Aarhus were also successful in The bank continues to see major opportunities in this segment, and it will continue to focus strongly on the segment, inter alia with the opening of the Private Banking branch in the Triangle Region. The bank will provide highly competent and dedicated staff to serve the segment, and the bank expects to be able to continue developing this business area in the future. Based on the prospects for 2016 and the activities and initiatives we want to carry out in 2016, the bank expects to be able to realise a growth in lending during Continuing pressure on the bank's interest margin is, however, also expected. The bank does not expect the conversion activity to continue in 2016, whereas the bank's activities in Private Banking and asset management are expected to continue to develop positively in the coming year. Finally, an increase in the level of cost of approximately 3% relative to the total costs in 2015 is expected, and impairment charges in 2016 are expected to be lower than in As a whole, core earnings in 2016 are expected to be in the range DKK million. To this must be added the profit from the bank s portfolio of securities. Accounting policies and key figures The accounting policies applied are unchanged relative to the audited annual report presented for Disclaimer: This document is a translation of an original document in Danish. The original Danish text shall be the governing text for all purposes and in case of any discrepancy the Danish wording shall be applicable.

9 Page 9 of 24 Main and key figures Main figures for the bank (million DKK) Total core income Total costs and depreciations Core earnings before impairments Impairment charges for loans etc Core earnings Result for portfolio Expenses for bank packages Profit before tax Profit after tax Shareholders equity 3,296 3,099 2,901 2,676 2,483 Deposits 16,987 15,450 14,114 12,867 12,755 Loans 17,300 15,507 13,849 12,424 12,747 Balance sheet total 22,317 21,238 19,583 17,682 17,549 Guarantees 2,234 2,218 1,902 1,667 1,052 Key figures for the bank (per cent) Return on equity before tax, beginning of year Return on equity after tax, beginning of year Rate of costs Common Equity Tier 1 capital ratio Tier 1 capital ratio Total capital ratio Individual solvency requirement Key figures per 5 DKK share (DKK) Core earnings Profit before tax Profit after tax Net asset value Price, end of period 1,500 1,152 1, Dividend

10 Page 10 of 24 Profit and loss account Note Interest receivable 736, ,924 2 Interest payable 91, ,253 Net income from interest 645, ,671 3 Dividend from shares etc. 13,010 7,897 4 Income from fees and commissions 301, ,082 4 Fees and commissions paid ,701 Net income from interest and fees 918, ,949 5 Value adjustments +29, ,293 Other operating income 4,964 4,001 6,7 Staff and administration costs 281, ,532 Amortisations, depreciations and write-downs on intangible and tangible assets 7,351 12,192 Other operating costs Miscellaneous other operating costs Costs Guarantee Fund and Resolution Fund 17,233 15,041 8 Impairment charges for loans and other debtors etc. -60,367-87,186 Result of investments in associated companies 2, Profit before tax 588, ,013 9 Tax 129, ,152 Profit after tax 458, ,861 Other comprehensive income 0 0 Total comprehensive income 458, ,861 Proposed distribution of profit Profit after tax 458, ,861 Total amount available for distribution 458, ,861 Spent on ordinary dividend 140, ,280 Spent on charitable purposes Transferred to reserve for net revaluation under the equity method 2, Appropriation to own funds 315, ,092 Total distribution of the amount available 458, ,861

11 Page 11 of 24 Core earnings Net income from interest 637, ,681 Net income from fees excl. commission 211, ,941 Income from sector shares etc. 36,413 25,576 Foreign exchange income 15,812 13,489 Other operating income 4,964 4,001 Total core income excl. trade income 906, ,688 Trade income 47,848 36,440 Total core income 954, ,128 Staff and administration costs 281, ,532 Amortisations, depreciations and write-downs on intangible and tangible assets 7,351 12,192 Other operating costs 17,301 15,177 Total costs etc. 306, ,901 Core earnings before impairments 648, ,227 Impairment charges for loans and other debtors etc. -60,367-87,186 Core earnings 587, ,041 Result for portfolio ,104 Expenses for bank packages Profit before tax 588, ,013 Tax 129, ,152 Profit after tax 458, ,861

12 Page 12 of 24 Balance sheet Note Assets End Dec End Dec Cash in hand and claims at call on central banks 331, , Claims on credit institutions and central banks 717, ,490 Claims at notice on central banks 130,019 0 Money market operations and bilateral loans - term to maturity under 1 year 262,583 60,490 Bilateral loans - term to maturity over 1 year 325, ,000 11,12,13 Loans and other debtors at amortised cost price 17,299,920 15,507,134 Loans and other debtors at amortised cost price 15,914,993 13,842,752 Wind turbine loans with direct funding 1,101,739 1,081,240 Collateralised repurchase agreements / reverse transactions 283, , Bonds at current value 3,114,721 4,659, Shares etc. 467, ,047 Investments in associated companies 2, Land and buildings total 64,287 66,401 Investment properties 6,056 6,056 Domicile properties 58,231 60,345 Other tangible assets 4,206 4,666 Current tax assets 71,624 87,779 Temporary assets 5, Other assets 230, ,863 Prepayments and accrued income 7,970 7,633 Total assets 22,317,429 21,237,908

13 Page 13 of 24 Balance sheet Note Liabilities and equity End Dec End Dec Debt to credit institutions and central banks 1,502,586 1,911,215 Money market operations and bilateral credits - term to maturity under 1 year 344, ,712 Bilateral credits - term to maturity over 1 year 55, ,263 Bilateral credits from KfW Bankengruppe 1,101,739 1,081, Deposits and other debts 16,986,543 15,450, Issued bonds at amortised cost price 0 236,238 Other liabilities 142, ,231 Deferred income and accruals 1,130 1,205 Total debt 18,632,996 17,755,162 Provisions for deferred tax 10,579 14, Provisions for losses on guarantees 5,478 3,995 Total provisions for liabilities 16,057 18,471 Tier 2 capital 372, ,216 Additional Tier 1capital 0 165, Total subordinated debt 372, , Share capital 23,350 23,900 Reserve for net revaluation under the equity method 2, Profit carried forward 3,129,831 2,949,750 Proposed dividend etc. 140, ,780 Total shareholders equity 3,296,098 3,098,608 Total liabilities and equity 22,317,429 21,237, Own capital share 22 Contingent liabilities etc. 23 Assets furnished as security 24 Capital statement 25 The supervisory diamond 26 Miscellaneous comments

14 Page 14 of 24 Statement of shareholders equity 2014 Share capital Reserve for net revaluation under the equity method Profit carried forward Proposed dividend etc. Total shareholders equity Shareholders equity at the end of the previous financial year 24, ,755, ,500 2,901,100 Reduction of share capital Dividend etc. paid -121, ,500 Dividend received on own shares 2,022 2,022 Shareholders equity after allocation of dividend etc. 23, ,757, ,781,622 Purchase and sale of own shares -128, ,875 Total comprehensive income , , ,861 Shareholders equity on the balance sheet date 23, ,949, ,780 3,098, Share capital Reserve for net revaluation under the equity method Profit carried forward Proposed dividend etc. Total shareholders equity Shareholders equity at the end of the previous financial year 23, ,949, ,780 3,098,608 Reduction of share capital Dividend etc. paid -124, ,780 Dividend received on own shares 3,385 3,385 Shareholders equity after allocation of dividend etc. 23, ,953, ,977,213 Purchase and sale of own shares -139, ,780 Total comprehensive income 2, , , ,665 Shareholders equity on the balance sheet date 23,350 2,317 3,129, ,600 3,296,098

15 Page 15 of 24 Notes Note Interest receivable Claims on credit institutions and central banks 15,990 16,750 Loans and other debtors 700, ,222 Loans - interest concerning the impaired part of loans -38,435-44,221 Reverse loans 5,094-3,457 Bonds 54,379 90,054 Total derivatives financial instruments, of which -4,281-12,782 Currency contracts 1, Interest-rate contracts -5,447-12,975 Other interest receivable 3,745 1,358 Total interest receivable 736, ,924 2 Interest payable Credit institutions and central banks 24,354 26,425 Deposits and other debts 54,268 92,049 Repo deposits 66 0 Issued bonds 3,679 7,207 Subordinated debt 8,790 13,023 Other interest payable Total interest payable 91, ,253 3 Dividend from shares etc. Shares 13,010 7,897 Total dividend from shares etc. 13,010 7,897 4 Gross income from fees and commissions Securities trading and custody accounts 58,631 45,378 Asset management 111,887 96,994 Payment handling 26,357 23,883 Loan fees 15,879 11,851 Guarantee commissions 56,362 51,891 Other fees and commissions 31,960 31,085 Total gross income from fees and commissions 301, ,082 Net income from fees and commissions Securities trading and custody accounts 47,848 36,440 Asset management 105,496 91,443 Payment handling 17,384 20,849 Loan fees 13,242 9,723 Guarantee commissions 56,362 51,891 Other fees and commissions 19,057 19,035 Total net income from fees and commissions 259, ,381 Foreign exchange income 15,812 13,489 Total net income from fees, commissions and foreign exchange income 275, ,870

16 Page 16 of 24 Notes Note Value adjustments Loans and other debtors, current value adjustment 9,249 11,129 Bonds -29,648 21,779 Shares etc. 34,659 23,594 Foreign exchange income 15,812 13,489 Total derivatives financial instruments, of which ,482 Interest-rate contracts -1,650 2,543 Share contracts 1, Issued bonds 0 3,295 Other liabilities 0 5,525 Total value adjustments 29,583 82,293 6 Staff and administration costs Payments to general management, board of directors and shareholders committee General management 5,037 4,001 Board of directors 1,633 1,392 Shareholders committee Total 7,085 5,786 Staff costs Salaries 130, ,664 Pensions 13,281 12,749 Social security expenses Costs depending on number of staff 20,485 17,826 Total 164, ,144 Other administration costs 109, ,602 Total staff and administration costs 281, ,532 7 Number of full-time employees Average number of employees during the financial year converted into full-time employees Impairment charges on loans and other debtors etc. Net changes in impairment charges on loans and other debtors and provisions for losses on guarantees 11,552 77,980 Actual realised net losses 87,250 53,427 Interest concerning the impaired part of loans -38,435-44,221 Total impairment charges on loans and other debtors etc. 60,367 87,186

17 Page 17 of 24 Notes Note Tax Tax calculated on the year s profit 133, ,780 Adjustment of deferred tax -2,973 1,826 Adjustment of deferred tax due to change in tax rate Adjustment of tax calculated for previous years 3 84 Total tax 129, ,152 Note Effective tax rate (%): The current tax rate of the bank Permanent deviations Adjustment of deferred tax due to change in tax rate Adjustment of tax calculated for previous years Total effective tax rate End Dec End Dec Claims on credit institutions and central banks Claims at call 98,583 59,014 Up to and including 3 months 230,019 0 More than 3 months and up to and including 1 year 64,000 1,476 More than 1 year and up to and including 5 years 320, ,000 More than 5 years 5,000 0 Total claims on credit institutions and central banks 717, , Loans and other debtors at amortised cost price At call 2,055,385 1,383,877 Up to and including 3 months 1,054,786 1,248,521 More than 3 months and up to and including 1 year 2,273,914 1,869,846 More than 1 year and up to and including 5 years 5,849,053 5,281,673 More than 5 years 6,066,782 5,723,217 Total loans and other debtors at amortised cost price 17,299,920 15,507,134 Of which collateralised repurchase agreements / reverse transactions 283, ,142

18 Page 18 of 24 Notes Note 12 Impairment charges for loans and other debtors and provisions for losses on guarantees End Dec End Dec Individual impairment charges Cumulative individual impairment charges for loans and other debtors at the end of the previous financial year 701, ,513 Impairment charges / value adjustments during the year 149, ,129 Reverse entry - impairment charges made in previous financial years -121, ,736 Booked losses covered by impairment charges -64,604-39,775 Cumulative individual impairment charges for loans and other debtors on the balance sheet date 664, ,131 Collective impairment charges Cumulative collective impairment charges for loans and other debtors at the end of the previous financial year 226, ,652 Impairment charges / value adjustments during the year 46, ,620 Cumulative collective impairment charges for loans and other debtors on the balance sheet date 272, ,272 Total cumulative impairment charges for loans and other debtors on the balance sheet date 937, ,403 Provisions for losses on guarantees Cumulative individual provisions for losses on guarantees at the end of the previous financial year 3,995 4,256 Provisions / value adjustments during the year 5,152 2,261 Reverse entry - provisions made in previous financial years -3,586-2,469 Booked losses covered by provisions Cumulative individual provisions for losses on guarantees on the balance sheet date 5,478 3,995 Total cumulative impairment charges for loans and other debtors and provisions for losses on guarantees on the balance sheet date 942, , Suspended calculation of interest Loans and other debtors with suspended calculation of interest on the balance sheet date 74,220 58,244

19 Page 19 of 24 Notes Note End Dec End Dec Bonds at current value Listed on the stock exchange 3,114,721 4,659,495 Total bonds at current value 3,114,721 4,659, Shares etc. Listed on Nasdaq Copenhagen 11,492 13,237 Investment fund certificates 196,590 27,413 Unlisted shares at current value 1,450 1,473 Sector shares at current value 257, ,924 Total shares etc. 467, , Debt to credit institutions and central banks Debt payable on demand 268, ,042 Up to and including 3 months 55, ,264 More than 3 months and up to and including 1 year 171,936 76,818 More than 1 year and up to and including 5 years 593, ,326 More than 5 years 413, ,765 Total debt to credit institutions and central banks 1,502,586 1,911, Deposits and other debts On demand 11,332,913 9,209,187 Deposits and other debts at notice: Up to and including 3 months 1,891,994 1,761,577 More than 3 months and up to and including 1 year 667,677 1,064,673 More than 1 year and up to and including 5 years 966, ,383 More than 5 years 2,127,093 2,466,453 Total deposits and other debts 16,986,543 15,450,273 Distributed as follows: On demand 10,912,726 8,815,421 At notice 327, ,422 Time deposits 2,352,697 2,735,273 Long term deposit agreements 2,192,532 2,238,720 Special types of deposits 1,201,282 1,312,437 16,986,543 15,450,273

20 Page 20 of 24 Notes Note End Dec End Dec Issued bonds at amortised cost price Up to and including 3 months 0 2,573 More than 3 months and up to and including 1 year 0 233,665 Total issued bonds at amortised cost price 0 236,238 Distributed as follows: Issues in Norwegian kroner: Nom. NOK 100 million 0 82,320 Regulation at amortised cost price and adjustment to current value of issues 0 2,473 Issues in euro: Nom. EUR 20 million 0 148,872 Other issues 0 2, , Subordinated debt Tier 2 capital: Floating rate loan, principal EUR 50 million, expiry ,125 0 Floating rate loan, principal EUR 27 million, expiry ,977 Additional Tier 1 capital: 4.795% bond loan, nom. DKK 200 million, indefinite term 0 200,000 Own holding of subordinated loan capital 0-35,500 Regulation at amortised cost price and adjustment to current value of Tier 2 capital and Additional Tier 1 capital Total subordinated debt 372, , Share capital Number of shares at DKK 5 each: Beginning of period 4,780,000 4,840,000 Cancellation during the year -110,000-60,000 End of period 4,670,000 4,780,000 Reserved for subsequent cancellation 100, ,000 Total share capital 23,350 23,900

21 Page 21 of 24 Notes Note End Dec End Dec Own shares Own shares included in the balance sheet at 0 0 The market value is 151, ,781 Number of own shares: Beginning of year 113,525 62,554 Purchases during the year 347, ,886 Sales during the year -250, ,915 Cancellation during the year -110,000-60,000 End of year 110, ,525 Reserved for subsequent cancellation 100, ,000 Nominal value of holding of own shares, end of year Own shares proportion of share capital, end of year (%) Contingent liabilities etc. Contingent liabilities Finance guarantees 1,112, ,987 Guarantees against losses on mortgage credit loans 80,981 62,074 Guarantees against losses Totalkredit 116, ,068 Registration and conversion guarantees 641, ,745 Sector guarantees 45,321 48,596 Other contingent liabilities 237, ,340 Total contingent liabilities 2,234,381 2,217, Assets furnished as security First mortgage loans were provided for German wind turbine projects. The loans are funded directly by KfW Bankengruppe, to which security in the associated loans has been provided. Each reduction of the first mortgage loans is deducted directly from the funding at the KfW Bankengruppe. The balance sheet item is 1,101,739 1,081,240 As security for clearing etc., the bank has pledged securities from its total holding to the Central Bank of Denmark to a total market price of 231, ,685

22 Page 22 of 24 Notes Note 24 Capital statement End Dec End Dec Credit risk 14,173,867 12,879,048 Market risk 1,539,489 1,464,214 Operational risk 1,750,809 1,567,369 Total risk exposure amount 17,464,165 15,910,631 Shareholders equity 3,296,098 3,098,608 Proposed dividend etc. -140, ,780 Deduction for prudent valuation -3,910 0 Deduction for the sum of equity investments etc. > 10% -118, ,584 Deduction of trading framework for own shares -55,000-55,000 Actual utilization of the trading framework for own shares 1,221 4,061 Common Equity Tier 1 capital 2,979,137 2,779,305 Additional Tier 1 capital 0 131,600 Deduction for the sum of equity investments etc. > 10% 0-131,600 Tier 1 capital 2,979,137 2,779,305 Tier 2 capital 373, ,782 Deduction for the sum of equity investments etc. > 10% -176, ,782 Own funds 3,275,493 2,779,305 Common Equity Tier 1 capital ratio (%) Tier 1 capital ratio (%) Total capital ratio (%) Own funds requirements 1,397,133 1,272, The supervisory diamond (Danish Financial Supervisory Authority limits) Stable funding (funding ratio) (< 1) Excess liquidity (> 50%) 99,7% 140.7% Total large exposures (< 125%) 63,4% 47.8% Growth in loans (< 20%) 14,0% 7.8% Real estate exposure (< 25%) 14,1% 11.6% 26 Miscellaneous comments on: Main and key figures for the bank Return on equity at the beginning of the year before and after tax are computed after allocation of dividend etc., net. Key figures per DKK 5 share are calculated on the basis of respectively 2015: 4,570,000 shares, 2014: 4,670,000 shares, 2013: 4,780,000 shares, 2012: 4,840,000 shares and 2011: 4,940,000 shares. Impairment charges for loans etc. Impairment charges for loans etc. are listed excl. expenses for bank packages.

23 Page 23 of 24 Quarterly overview (Million DKK) 4 th qtr rd qtr nd qtr st qtr th qtr rd qtr nd qtr st qtr th qtr rd qtr nd qtr st qtr Net income from interest Net income from fees and commissions excl. trade income Income from sector shares etc Foreign exchange income Other operating income Total core income excl. trade income Trade income Total core income Staff and administration costs Amortisation, depreciation and write-downs on intangible and tangible assets Other operating costs Total costs etc Core earnings before impairments Impairment charges for loans and other debtors etc Core earnings Result for portfolio Expenses for bank packages Profit before tax Tax Profit after tax

24 Page 24 of 24 Danish Financial Supervisory Authority key figures for Danish banks Capital ratios: Total capital ratio % Tier 1 capital ratio % Individual solvency requirement % Earnings: Return on equity before tax % Return on equity after tax % Income / cost ratio DKK Return on assets % Market risk: Interest rate risk % Foreign exchange position % Foreign exchange risk % Liquidity risk: Excess cover relative to statutory liquidity Requirement % Loans and impairments thereon relative to deposits % Credit risk: Loans relative to shareholders equity Growth in loans for the year % Total large exposures % Cumulative impairment percentage % Impairment percentage for the year % Proportion of debtors at reduced interest % Share return: Result for the year after tax per share * / *** DKK 1, , , , ,135.2 Book value per share * / ** DKK 14,428 13,280 12,145 11,049 10,055 Dividend per share * DKK Share price relative to profit for the year per share * / *** Share price relative to book value per share * / ** * Calculated on the basis of a denomination of DKK 100 per share. ** Calculated on the basis of number of shares outstanding at the end of the year. *** Calculated on the basis of the average number of shares. The average number of shares is calculated as a simple average of the shares at the beginning of the year and at the end of the year.